Bill Text: MO HB398 | 2013 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest DraftBill Title: Allows an electrical corporation to file a petition with the Missouri Public Service Commission to recover specified infrastructure replacement costs

To amend chapter 393, RSMo, by adding thereto two new sections relating to ratemaking for
public utilities.

Be it enacted by the General Assembly of the state of Missouri, as follows:

Section A. Chapter 393, RSMo, is amended by adding thereto two new sections, to be
known as sections 393.1019 and 393.1110, to read as follows:

393.1019. 1. Notwithstanding any provisions of chapter 386 or this chapter to the
contrary, beginning August 28, 2013, an electrical corporation providing electric service
may file a petition and proposed rate schedules with the commission to establish or change
ISRS rate schedules that will allow for the adjustment of the electrical corporation's rates
and charges to provide for the recovery of costs for eligible infrastructure system
replacements and additions. The establishment of or change to the ISRS provided for in
this section shall be accomplished by applying to electrical corporations the following
sections or portions thereof, as if said sections or portions thereof referred to electrical
corporations: all of subsection 1 of section 393.1012, except the first sentence; all of
subsections 2 and 3 of section 393.1012; and all of section 393.1015, except subsection 11.
In applying said sections or portions thereof to electrical corporations, all references in said
sections or portions thereof to a gas corporation shall be deemed to instead refer to an
electrical corporation, and the terms used in said sections or portions thereof that are
defined in section 393.1009, which is applicable to an ISRS for a gas corporation, shall be
replaced by the corresponding terms provided for in subsection 2 of this section, as
applicable to an ISRS for an electrical corporation.

2. As used in the application to electrical corporations of the sections or portions
thereof identified in subsection 1 of this section, the following terms shall mean:

(a) The electrical corporation's weighted cost of capital multiplied by the net
original cost of eligible infrastructure system replacements and additions, including
recognition of accumulated deferred income taxes and accumulated depreciation associated
with eligible infrastructure system replacements and additions which are included in a
currently effective ISRS;

(b) State, federal, and local income or excise taxes applicable to such income; and

(c) All other ISRS costs;

(2) "Commission", the Missouri public service commission;

(3) "Electrical corporation", shall have the same meaning as in subdivision (15) of
section 386.020;

(4) "Electric utility plant projects", consist of the following:

(a) Electric plant, as defined in subdivision (14) of section 386.020, including but
not limited to poles, towers, wires, conduit, transformers, substations, generating plants
and their components, and cyber-security, customer service, and smart grid investments,
whether installed as replacements for existing components that have worn out, are in a
deteriorated condition, or are anticipated to be in need of replacement, or whether added
to the electrical corporation's infrastructure;

(b) If not being recovered in a rate schedule authorized by subsection 2 of section
386.266, the costs of capital projects undertaken to comply with federal, state, or local
environmental or safety statutes, ordinances, or regulations; and

(c) The costs of facilities relocations required due to construction or improvement
of a highway, road, street, public way, or other public work by or on behalf of the United
States, this state, a political subdivision of this state, or another entity having the power of
eminent domain provided that the costs related to such projects have not been reimbursed
to the electrical corporation;

(a) Do not increase revenues by directly connecting the infrastructure replacement
or addition to new customers;

(b) Are in service and used and useful;

(c) Were not included in the electrical corporation's rate base in its most recent
general rate case; and

(d) Replace or extend the useful life of existing infrastructure or are for additional
infrastructure;

(6) "ISRS", infrastructure system replacement surcharge;

(7) "ISRS costs", depreciation expense for all eligible infrastructure system
replacements and additions that are placed in service and became used and useful since the
date through which rate base additions were accounted for in developing the revenue
requirement in the electrical corporation's most recent general rate case or its last ISRS
filing offset by retirements and changes to the accumulated depreciation reserve over the
same time period, and return on said eligible infrastructure system replacements and
additions at the electrical corporation's weighted cost of capital used to determine the
appropriate pretax revenues, with both the depreciation and return to be deferred on the
electrical corporation's books between the time the eligible infrastructure system
replacements and additions were placed in service and the effective date of an ISRS rate
schedule reflecting the deferred depreciation and return;

(8) "ISRS revenues", revenues produced through an ISRS exclusive of revenues
from all other rates and charges.

2. The commission shall have the authority to promulgate rules for the
implementation of this section, but only to the extent such rules are consistent with, and
do not delay the implementation of, the provisions of this section. Any rule or portion of
a rule, as that term is defined in section 536.010 that is created under the authority
delegated in this section shall become effective only if it complies with and is subject to all
of the provisions of chapter 536, and, if applicable, section 536.028. This section and
chapter 536 are nonseverable and if any of the powers vested with the general assembly
pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul
a rule are subsequently held unconstitutional, then the grant of rulemaking authority and
any rule proposed or adopted after August 28, 2013, shall be invalid and void.

393.1110. 1. Notwithstanding any provision of chapter 386 or this chapter to the
contrary, in all electrical corporation general rate proceedings initiated after August 28,
2013, the commission shall implement a mechanism to track any differences between:

(1) The noncapitalized costs used to set the revenue requirement in that rate case
for the electrical corporation's or its affiliate's labor, training, benefits, including but not
limited to workers compensation insurance and payroll taxes, property taxes, property
insurance, and external contractors contracted with by the electrical corporation for the
operation or maintenance of the electrical corporation's transmission, distribution, or
generation systems; and

(2) The sum of those costs that are actually incurred by, or allocated to, the
electrical corporation as reflected on its books and records in subsequent periods.

2. The electrical corporation shall defer any amounts tracked under subsection 1
of this section on its books and records as a regulatory asset or regulatory liability. In its
next general rate proceeding, the regulatory asset or regulatory liability will be included
in the determination of the electrical corporation's revenue requirement through an
amortization over a period of three years, without any offset, reduction, or adjustment
based upon consideration of any other factor or otherwise, except for a review of the
prudence of the costs included in any regulatory asset as part of the general rate
proceeding. Notwithstanding the foregoing, the following costs shall not be included in the
electrical corporation's or its affiliate's labor or benefits components of the foregoing
calculation:

(1) Any costs in a separate deferred accounting mechanism or tracker;

(2) Labor costs for the electrical corporation's or the electrical corporation parent
company's officers; and

(3) That portion of the electrical corporation's labor costs that consist of incentive
compensation that is dependent on the electrical corporation's or the electrical
corporation's parent company's earnings.

3. In subsequent general rate proceedings occurring after a general rate proceeding
where an amortization through rates of a regulatory asset or regulatory liability began, any
unamortized balance shall be included in the electrical corporation's revenue requirement
through a reamortization of said balance over a period of three years, also without any
offset, reduction, or adjustment based upon consideration of any other factor or otherwise.

4. The commission shall have the authority to promulgate rules for the
implementation of this section, but only to the extent such rules are consistent with, and
do not delay the implementation of, the provisions of this section. Any rule or portion of
a rule, as that term is defined in section 536.010 that is created under the authority
delegated in this section shall become effective only if it complies with and is subject to all
of the provisions of chapter 536, and, if applicable, section 536.028. This section and
chapter 536 are nonseverable and if any of the powers vested with the general assembly
pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul
a rule are subsequently held unconstitutional, then the grant of rulemaking authority and
any rule proposed or adopted after August 28, 2013, shall be invalid and void.